Hopes of a year-end rally continues to fade despite this move by the Fed.
The New York Federal Reserve has continued to inject liquidity into the U.S. economy through its overnight repo operations. This marks a positive for the crypto market, which is eyeing a year-end rally even as optimism among crypto traders fades.
New York Fed Pumps $26B Into The Economy as Crypto Market Eyes Rally
New York Fed data show that the U.S. central bank conducted overnight repo operations, injecting $26 billion into the economy. This came through a $16 billion purchase of treasury bills and a $9.95 billion purchase of mortgage-backed securities.
This follows a similar move last week in which the Fed injected $2.5 billion through treasury bills and mortgage-backed securities. This is bullish for the crypto market as it eyes a year-end rally.
Notably, the Bitcoin price had rallied above $90,000 overnight, just as the Fed injected $26 billion into the economy. However, the flagship crypto has since lost all these gains, dropping to as low as $86,700 on the day.
The broader market is also down following Bitcoin’s crash to its intraday low. CoinMarketCap data shows that the total crypto market is at $2.96 trillion, down almost 1% in the last 24 hours.
In the absence of a year-end rally, BTC and other major crypto assets, including Ethereum, XRP, and Solana, risk ending the year in the red. Bitcoin is currently down over 6% year-to-date (YTD). ETH, XRP, and SOL are down 11%, 10%, and 36%, respectively.
Optimism Fades Over A Year-End Rally
Polymarket data shows that optimism is fading for a year-end rally for the crypto market. The odds of a BTC rally to $95,000 has fallen to 3% while the odds of a drop to $80,000 is at 4%, indicating that traders expect the flagship crypto to trade within a tight range till the year ends.
Notably, Bitcoin continues to face significant selling pressure at the $90,000 resistance level. CoinGape reported today that BlackRock deposited 2,201 BTC ($192 million) into Coinbase, likely to offload these coins. The BTC ETFs have continued to register daily net outflows, and have recorded a monthly net outflow of $1.08 billion this December.
Market analyst Ted Pillows noted that BTC’s spot CVD is trending down, suggesting the crypto market is more at risk of a further decline than a year-end rally. He also mentioned that the Coinbase Bitcoin premium has flipped negative, which he also suggested is a cause for concern for market participants.
